The Energy Supply Company Administration (Scotland) Rules 2013

EXPLANATORY NOTE

(This note is not part of the Rules)

These Rules set out the procedure for the conduct of energy supply company administration proceedings in Scotland. Energy supply company administration is a special insolvency regime specifically created for the companies that supply gas and electricity in Great Britain.

The framework for the energy supply company administration regime is set out in Chapter 5 of Part 2 of the Energy Act 2011 (c.16). That Act applies (with modifications) much of Chapter 3 of Part 3 of the Energy Act 2004 (c.20), which provides for a special insolvency regime for energy companies that run and operate gas and electricity networks in Great Britain. Only energy supply companies as defined in section 94 of the Energy Act 2011 may enter energy supply company administration. These are companies that hold a licence granted under section 7A(1)(a) or (b) of the Gas Act 1986 to supply gas, or a licence granted under section 6(1)(d) of the Electricity Act 1989 to supply electricity.

The energy supply company administration process is commenced by an application to court for an energy supply company administration order. Such an application can be made by either the Secretary of State or, with the consent of the Secretary of State, by the Gas and Electricity Markets Authority.

An insolvency practitioner appointed to manage the affairs, business and property of the energy supply company is defined in section 94(2) of the Energy Act 2011 as an energy administrator.

These Rules are based upon the provisions of the existing Insolvency (Scotland) Rules 1986 (S.I. 1986/1915) but are a stand-alone set of rules applicable only to energy supply company administration proceedings. These Rules apply to energy supply companies which the courts in Scotland have jurisdiction to wind up. There are separate Rules (The Energy Supply Company Administration Rules 2013 – S.I. 2013/    ) which apply to energy supply companies which the courts in England and Wales have jurisdiction to wind up.

Part 1 of these Rules contains the interpretation and application provisions.

Part 2 sets out the procedure to be followed in relation to proceedings for the appointment of an energy administrator and on whom such proceedings must be served.

Part 3 details the initial steps to be taken in energy supply company administration proceedings. These include the notification and advertisement of the energy administrator’s appointment and the preparation of a statement of the energy supply company’s affairs. Part 3 also sets out the information that must be given to creditors in the energy administrator’s proposals.

Part 4 governs the conduct of creditors and company meetings called by an energy administrator during energy supply company administration proceedings. Part 4 also deals with the provision of progress reports relating to the administration and applications by the administrator to dispose of secured property.

Part 5 makes provision in respect of claims in the energy supply company administration and how they are to be established and quantified, as well as the voting rights that flow from claims which are accepted. It also provides for a criminal offence in respect of false claims by creditors.

Part 6 concerns distributions to creditors of the energy supply company and the expenses of the administration. It sets out the order of priority in any distribution and the mechanism for calculating the outlays and remuneration of the energy administrator.

Part 7 sets out the arrangements for ending an energy supply company administration. There are specific provisions detailing the ending of an energy supply company administration by court order, as well as the process by which an energy supply company administration moves into either a creditors’ voluntary liquidation or dissolution of the energy supply company.

Part 8 deals with the requirements and procedures for replacing an energy administrator and includes provisions relating to the resignation of an energy administrator and the removal of an energy administrator from office by court order.

Part 9 makes provision in respect of the share of the assets of the energy supply company for unsecured creditors (the prescribed part).

Part 10 makes provision for the use of proxies at creditors’ or members’ meetings held during an energy supply company administration, including the rights of inspection of such proxies and the procedure to be followed where a proxy-holder has a financial interest in the outcome of a resolution to be voted on at the meeting.

Part 11 deals with the rules relating to the giving of notices in relation to the energy supply company administration. It includes provisions relating to electronic delivery and the use of websites by the energy administrator.

Part 12 deals with miscellaneous provisions, including the energy administrator’s caution, electronic submission of forms, content of notices and provides the court with power to cure defects in procedure.

The Schedule to the Rules contains the forms that are to be used in energy supply company administration proceedings. The forms in this Schedule are based upon the forms contained in the Insolvency (Scotland) Rules 1986 which deal with ordinary administration, but have been modified for the purposes of energy supply company administration.

A full impact assessment has been produced for this instrument, and has been placed in the library of each House of Parliament. Copies are obtainable from Dawn Armstrong, Demand Reduction and Retail Markets, Department of Energy and Climate Change, 3 Whitehall Place, London SW1A 2HD ( email:[e-mail]). The impact assessment is also available alongside the instrument at www.legislation.gov.uk.